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The Seamless Air Alliance is making good progress in establishing a common standard for connectivity, to make it as easy to use in the air as it is on the ground
 
The Seamless Air Alliance was created in June 2018 as a non-profit organisation, with the aim of enabling travellers boarding any flight, on any airline, anywhere in the world, to use their own devices to automatically connect to the internet with no complicated login process or paywall. To achieve this, it is promoting open standards for integrating new technology; interchangeability; lowering the cost of installation; and influencing mobile standards that benefit these objectives.
 
The founding members were Airbus, Airtel, Delta Air Lines, OneWeb and Sprint. They were quickly joined by Air France KLM, Aeroméxico, and GOL Linhas Aereas Inteligentes, as well as global technology companies Astronics, Collins Aerospace, Comtech, Cyient, iDirect, Inmarsat, Intelsat, Latécoère, Nokia and Panasonic. In February 2019, Adaptive Channel, Etihad Airways, GlobalReach Technology, Safran and SITAONAIR came on board. That same month saw the publication of a White Paper by industry veteran Peter Lemme entitled The Profitable Economics of Inflight Connectivity.
 
Research included an independent study of the cash flow, and Net Present Value (NPV) of the inflight connectivity market was created to examine the potential consequences of changes in the assumptions as related to activities of the Seamless Air Alliance. Net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. The purpose of the analysis was to scale the relative benefit from each area of improvement.
 
The model analysed the profit/loss of the airline paying for the aircraft equipage, receiving revenue from passengers and paying for the service costs. The costs and price points are expected to be representative of the marketplace. The study examined the impact of a 5% year-over- year favourable change from the baseline. The baseline analysis is done over a period of ten years – from 2019 to 2028 – and assumes a worldwide fleet of 10,000 IFC-enabled aircraft at the beginning, and 25,500 aircraft at the end. Take rates increase over time in all cases, and baseline per-session retail prices and costs are assumed to decrease 5% year-over-year. A ten-year NPV is computed based on the resulting cashflow and using a discount rate of 10%. 
 
OVERCOMING FRICTION
Friction can be defined as the resistance to motion. Passengers succumb to the slightest friction when it comes to purchasing internet access onboard aircraft. This type of friction comes in many forms, and when inflight connectivity is anything but free, a hurdle of resistance is created. For inflight connectivity, the first form of friction occurs when a passenger is confronted with the traditional inflight connectivity paywall. Entering credit card information on an unfamiliar network and portal, with a host of strangers in close-proximity, is a definite form of friction. This is part of the reason pay-per-use aero internet sessions have been unable to achieve take rates over 10% on average.
 
Seamless will leverage automatic onboard connection through a trusted relationship with the user’s cellular or Passpoint provider. Passengers are connected simply and securely using over-the-air encryption and SIM- or certificate-based authentication. This happens in a transparent manner that eliminates the immediate paywall hurdle and streamlines the process of staying connected. Additional laptops, tablets, and other non-SIM devices can easily attach via two-factor authentication or fallback to the traditional paywall model. A comparison was made from the baseline model assuming that the convenience of automatic onboard connection creates a 5% improvement in take rate above the baseline. This results in an increase of $0.9 billion to the NPV.
 
COST-PER-SESSION
Aircraft systems and networks are complex. Avionics and antennas must meet strict environmental and electromagnetic qualification standards whilst minimising weight and drag. Aircraft are rarely available for extended maintenance; failures must be minimised overall and repaired rapidly. Standards simplify the introduction of new innovations and accelerate the deployment of cost savings and performance enhancements while avoiding vendor lock. Standards allow an interchangeable architecture with provisions and interfaces. More and more of the radio system, and even antennas, are software-defined. These newest features can be deployed rapidly by software update or by plug-and-play.
 
A standards-based installation creates a level playing field for suppliers. Instead of a unique configuration that is locked down by a supplier to stave off competition, a standards-based provision and interface welcomes all suppliers equally. Considering the emergence of new, cheaper satellite constellations, the price of connectivity is expected to reduce with time. A baseline assumes that session prices decline by 5% per year. Reducing per-session costs is principally related to reducing the cost of airtime or bandwidth on the radio link. While bandwidth prices are decreasing, users are consuming more data in each session.
 
The opposing dynamics are volatile: new satellite constellations are expected to bring significant capacity and lower prices. A comparison was made from the baseline model assuming that open standards accelerate the pace of competition, innovation and lower costs by an additional 5% from the baseline. This results in an increase of $6.8 billion to the NPV.
 
OPERATION EXPENSES
Recurring Operation Expenses (Opex) are those costs to the Communication Service Provider (CSP) and to the airline scaled by the number of aircraft. The CSP and airline operate the equipment on the aircraft. The CSP also operates a radio network and network operations centre; provides equipment supply and repair; aircraft installation; data warehousing; engineering and development; quality control; commercial and financial functions; regulatory approvals; the portal and content; network management; network security; and other functions.
 
The airline also provides the touch labour in the field for installation and maintenance; marketing support; flight attendants trained to operate the service; adjustments to performance; revised maintenance and service procedures; and other functions. Standards simplify system selection, installation, and maintenance, and provide common and complete interface definitions to ensure trouble-free upgrades can be completed in a timely and efficient manner. As aircraft configurations vary, support is best done commonly.
 
A comparison is made from the baseline model assuming that operational standards enable economic efficiencies that lower costs by an additional 5% from the baseline. This results in an increase of $2.2 billion to the NPV.
 
CAPITAL EQUIPMENT COSTS
Inflight connectivity requires the installation of a broadband radio, antenna, radome, adapter plate, lugs, fittings, bulkhead penetrations, a wiring harness, and several line-replaceable units (LRU) as described in either ARINC 791 or ARINC 792. The Modman includes the modem and the system manager. The KANDU/ KPSU includes the power supply. The KRFU includes the High-Power Amplifier (HPA). ARINC 792 does not use a KRFU and instead the HPA is installed with the aperture. Additional costs include test and certification, labor for installation, and the potential for lost revenue while the aircraft is out of service.
 
Building or accommodating variation generally drives higher cost. It is preferable to make every installation equivalent using similarity, rather than discovery or invention. Standard provisions and interfaces provide efficiencies from more rapid installation and repair. Line replaceable units can be replaced simply and quickly. Using the same parts and interfaces across multiple programmes gives rise to economy of scale. Larger development pools mean greater development capacity.
 
Larger spares pools mean parts are most likely to be available. Larger markets allow greater amortisation. A comparison is made from the baseline model assuming that standardised equipment and economies of scale lower costs by 5% from the baseline. This results in an increase of $1.1 billion to the NPV. Based on a modest 5% impact in the four areas examined, activities of the Seamless Air Alliance present the potential to increase the value of the inflight connectivity market by $11.4 billion dollars. The relationships within the Seamless Air Alliance architecture are shown above. The airline engages a Communication Service Provider (CSP) to install an onboard LAN, a broadband radio, and radio network.
 
The CSP may use a wifi access point, a cellular base station or both. The CSP engages a Roaming Partner Network (RPN) to facilitate roaming agreements and billing. The Seamless SkyMNO is a combination of the CSP and the Roaming Partner Network. The cellular subscriber attaches onboard using either a cellular base station or wifi access point. The Passpoint subscriber attaches to the onboard wifi network using 802.11u and 802.1x. The RPN represents the aircraft operator radio network as a visited location.
 
The RPN communicates with either the Home MNO or Passpoint provider as directed. The Home provider authorises a session. The combined network architecture, along with some of the enabling technology and protocols. The Roaming Partner Network aggregates roaming partners of every style to maximise the pool of subscribers. 
 
The relationships within the Seamless Air Alliance architecture are shown right. The airline engages a Communication Service Provider (CSP) to install an onboard LAN, a broadband radio, and radio network. The CSP may use a wifi access point, a cellular base station or both. The CSP engages a Roaming Partner Network (RPN) to facilitate roaming agreements and billing. The Seamless SkyMNO is a combination of the CSP and the Roaming Partner Network. The cellular subscriber attaches onboard using either a cellular base station or wifi access point. The Passpoint subscriber attaches to the onboard wifi network using 802.11u and 802.1x. The RPN represents the aircraft operator radio network as a visited location. The RPN communicates with either the Home MNO or Passpoint provider as directed. The Home provider authorises a session.
 
PASSENGER INTEREST HAS SHIFTED FROM VOICE TO DATA, FROM TALKING TO BROWSING, BUT WHAT DO WE KNOW ABOUT THE CURRENT STATE OF INFLIGHT CONNECTIVITY?
 
Passengers will use the internet if you give it away for free;
Passengers need more and more internet to satisfy their needs as time goes by;
Passengers are accustomed to getting internet for free at the airport and at the hotel. Otherwise, they rely on their phone for data access;
Some passengers will pay for the internet access, but the payment heightens their frustration with poor performance;
The current practice of high prices, spotty coverage, and poor performance, combined with quirky portals and credit card payments, has limited take rates to 10% or less;
Sponsorships have created a value proposition that drives take rate. For example, T-Mobile allows their subscribers service 
on Gogo equipped aircraft;
Airlines and service providers have had limited success with third-party revenue;
Targeted advertising and significant sales remain a future endeavour. Most of the revenue comes from passenger service fees;
Airline capital costs to install equipment, coupled with ongoing service charges, ongoing maintenance charges that include sparing and repair, operation costs due to weight and drag, training costs, new feature development, and internal staffing all collect more cost than passengers are willing to pay.

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